Get tough with contract defaults

It’s understandable the city of Tampa has tried to give small businesses a break when awarding contracts. But the priority must be getting the job done.

The city needs to revamp its bid process, and Mayor Bob Buckhorn is right to pursue imposing penalties on companies that fail to keep their commitments.

As the Tribune’s Kevin Wiatrowski reports, an increasing number of companies are winning city contracts with low bids and then finding the work is too much for them. It has happened at least six times this year.

The city then ends up having to find another firm to do the job, wasting time and money and disrupting service.

Buckhorn says the city is on its third vendor for maintaining road medians because of defaults.

This does not look to be a result of deception but a case of companies, desperate to keep employees working during a sluggish economy, not appreciating the magnitude of the city work assignments.

“These folks are trying their best,” the mayor says, “But their eyes see more than their bellies can hold.”

A mowing company, for instance, defaulted on its contract with the city because it couldn’t keep up with the fast-growing grass during a rainy summer and suffered frequent equipment damage because of hidden objects in the high grass.

The city does not penalize companies that call it quits.

As Wiatrowski found, many governments do. In Pasco, a default makes a company ineligible for a county contract for three years. Hillsborough also banishes defaulting companies for as much as two years.

Another strategy is to require a company to post a bond, a financial guarantee the contract will be honored backed by a bank or insurance company.

Buckhorn believes a bond demand would keep smaller companies from ever competing for city contracts.

He and his staff are more likely to favor preventing a default company from bidding for a city job for a year or two. That is fine.

But it is important, as the mayor recognizes, to make sure the companies are better educated about exactly what a job entails.

It also may sometimes be possible to divide a job into several smaller contracts, as the city does under its effort to help women- and minority-owned businesses.

But the focus should be on results.

Using private firms for public jobs can often cut costs and improve efficiency. But as Tampa’s experience underscores, privatization is hardly flawless. It requires the same rigorous oversight as do public agencies.

Buckhorn says, “We are always being pressured to privatize operations, and that is what we want to do. But you can get yourself into situations like this.”

With the proper penalties and preparation, the city can minimize the chances of such situations. But officials must keep in mind a low bid doesn’t mean much if the company can’t do the job.